US jobless claims fall; US factory orders rise; Brazil on the skids; Macao slumps dramatically; iron ore price rise strongly; UST 10yr yield 1.82%; oil flat, gold rises; NZ$1 = 67.4 US¢, TWI-5 = 72

Fonterra has a problem that can be described as the absence of balance sheet separation, because where Fonterra's balance sheet "stops" and its suppliers' balance sheets "start" is something of a semi-permeable membrane. This is because both are linked by payout subordination to the banks. This means that the banks get first call on payout revenue. Indeed, this is the sole reason Fonterra can maintain its current credit rating (which is high) given its current gearing (which is also very high when it should be considerably lower).

Amazing that Fonterra's obligation to default on it's shareholder's payout warrants a higher credit rating (vicious circle economics for sure). It's exactly the situation New Zealand bank depositors find themselves in, except they stand as bank capital underwriters for both the aforementioned parties at the RBNZ's pleasure.

Projection much?

the crunch is the Europeans will be the 'key exporters' no longer NZ. A new Paradigm for NZ farmers to adapt to. Do we have the tools or will we be looted?

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In my archives there is a column or two that introduces the reader to John Perkins’ important book, Confessions of an Economic Hit Man. An EHM is an operative who sells the leadership of a developing country on an economic plan or massive development project. The Hit Man convinces a country’s government that borrowing large sums of money from US financial institutions in order to finance the project will raise the country’s living standards. The borrower is assured that the project will increase Gross Domestic Product and tax revenues and that these increases will allow the loan to be repaid.

However, the plan is designed to over-estimate the benefits so that the indebted country cannot pay the principal and interest. As Perkins’ puts it, the plans are based on “distorted financial analyses, inflated projections, and rigged accounting,” and if the deception doesn’t work, “threats and bribes” are used to close the deal.

The next step in the deception is the appearance of the International Monetary Fund. The IMF tells the indebted country that the IMF will save its credit rating by lending the money with which to repay the country’s creditors. The IMF loan is not a form of aid. It merely replaces the country’s indebtedness to banks with indebtedness to the IMF.

To repay the IMF, the country has to accept an austerity plan and agree to sell national assets to private investors. Austerity means cuts in social pensions, social services, employment and wages, and the budget savings are used to repay the IMF. Privatization means selling oil, mineral and public infrastructure in order to repay the IMF. The deal usually imposes an agreement to vote with the US in the UN and to accept US military bases.

Occasionally a country’s leader refuses the plan or the austerity and privatization. If bribes don’t work, the US sends in the jackals—assassins who remove the obstacle to the looting process.

Perkins’ book caused a sensation. It showed that the United States’ attitude of helpfulness toward poorer countries was only a pretext for schemes to loot the countries. Perkins’ book sold more than a million copies and stayed on the New York Times bestseller list for 73 weeks.

Now the book has been reissued with the addition of 14 new chapters and a 30-page listing of Hit Man activity during the years 2004-2015. http://www.amazon.com/New-Confessions-Economic-Hit-Man/dp/1626566747/re…

Nothing to do with marginal versus average - nothing at all

You've heard of disruptive technologies - same effect

I see it as disruptive market events, in the same context as Uber and Air-Bnb